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Energy Lender Price Survey
Q1 2015
Q1/15 Overview
We are pleased to present Macquarie Tristone’s Quarterly Energy Lender Price Survey, a commodity pricing
poll of energy reserve-based lenders. Our survey of energy lenders’ price forecasts covers a broad spectrum
of regional, U.S. national and international banks that engage in energy reserve-based lending (“Participating
Banks”). This quarter’s survey includes thirty-nine Participating Banks.
Historically the lender base case price decks presented in the Energy Lender Price Survey have used prices at
a discount to the current forward strip. The recent downward move in commodity prices has driven lender
base case price decks above the current strip prices for the first time in the last five years. Between 2009 and
2014, base case price decks had a range of 72% to 86% of WTI in the front-year and a range of 73% to 90%
average of the forward five years. Current base price decks for 2015 YTD average 101% of WTI in the frontyear and 101% average of the forward five years.
110%
Base Case/WTI Strip
100%
90%
80%
70%
Front-Year
Second-Year
2009
2011
Third-Year
2012
2013
Fourth-Year
2014
Fifth-Year
2015 YTD
MacquarieCapital ⏐ PAGE 1
The last time that the lender base cases exceeded 100% of WTI was in Q4 2008 when percentages reached
110% in the front-year.
110%
Base Case/WTI Strip
100%
90%
80%
70%
Front-Year
Second-Year
Third-Year
Q4 2008
Fourth-Year
Fifth-Year
Q1 2015
Base Case Results
For 2015, the Q1/15 Survey indicates a mean Base Case West Texas Intermediate (“WTI”) oil price forecast of
$50.50/BBL and a mean Base Case Henry Hub (“HH”) gas price forecast of $3.02/MMBtu. Our survey of
Brent-based oil price forecasts shows a mean Base Case Brent of $52.50/BBL for 2015. The five-year trend
shows an increasing forward price deck for oil and gas, with average 2019 price forecasts of $66.79/BBL
(WTI), $68.67/BBL (Brent) and $3.85/MMBtu (HH).
Eighty-two percent of respondents do not escalate prices past 2019 and prices are capped at means of
$72.13/BBL (WTI), $74.75/BBL (Brent) and $4.34/MMBtu (HH). The average discount rate used by
Participating Banks is 9% for Base Case WTI, Brent and HH, unchanged from last quarter’s average.
Operating costs on average are escalated 0.5% per year.
Participating Banks consider proved reserve categories to different extents, but lenders which only consider
proved developed producing reserves average an advance rate of approximately 65%.
1st Quarter 2015 Price Survey: Mean of 39 Participating Banks – Base Case
Oil ($/BBL) - WTI
Oil ($/BBL) - Brent¹
Gas ($/MMBtu) - Henry Hub
2015
50.50
52.50
3.02
2016
57.22
60.17
3.29
2017
61.57
63.67
3.50
2018
64.60
66.83
3.69
2019
66.79
68.67
3.85
2020+ Esc.
1.4%
2.0%
1.4%
Cap
72.13
74.75
4.34
LOE Esc.
0.5%
0.5%
0.5%
9%
9%
9%
Discount Rate
1
Mean of 3 Participating Banks
PAGE 2 ⏐ MacquarieCapital
Current WTI Oil Pricing – Base Case ($/BBL)
$30
2014
$50
$70
2015
$45.00
$50.50
$65.00
2016
$47.00
$57.22
$71.25
2017
$53.00
$61.57
$75.00
2018
$57.00
$64.60
$76.04
2019
High
Mean
Low
$59.81
$66.79
Current Brent Oil Pricing – Base Case ($/BBL)1
$30
2014
$50
$70
2015
$50.00 $52.50 $55.50
2016
$57.00 $60.17
$65.50
2017
$60.00 $63.67
$68.00
2018
$65.00 $66.83 $70.50
2019
High
1
Mean
$65.00 $68.67
Low
$73.00
Mean of 3 Participating Banks
Current HH Pricing – Base Case ($/MMBtu)
$1.00
2014
$2.00
$3.00
$4.00
$5.00
2015
$3.50
$3.02
$2.50
2016
$3.75
$3.29
$2.50
2017
$4.00
$3.50
$2.50
2018
$2.75
$3.69
$4.25
2019
High
Mean
Low
$2.75
$3.85
$4.40
MacquarieCapital ⏐ PAGE 3
Base Case to NYMEX Trends
Base Case Q1/15 vs. NYMEX as of January 15, 2015
We compared the average Base Case against NYMEX futures pricing as of January 15, 2015, as shown
below. Base Case results for WTI average 101% of NYMEX WTI futures in 2015, and Base Case results for
Brent average 105% of NYMEX WTI futures in 2015. Base Case results for WTI average 101% of NYMEX
WTI futures over the five-year strip from 2015-2019, and Base Case results for Brent average 105% of NYMEX
WTI futures over the five-year strip from 2015-2019.
$80.00
$/BBL
$70.00
$60.00
$50.00
$40.00
2015
2016
Base Case WTI 1Q/15
2017
Base Case Brent 1Q/15
2018
2019
NYMEX WTI Futures as of January 15, 2015
When compared with NYMEX futures pricing, the average Base Case results for gas were 96% of NYMEX HH
futures in 2015 and 98% of NYMEX HH over the five-year strip from 2015-2019.
$/MMBtu
$4.00
$3.50
$3.00
$2.50
2015
2016
Base Case HH 1Q/15
PAGE 4 ⏐ MacquarieCapital
2017
2018
2019
NYMEX HH Futures as of January 15, 2015
Quarter-to-Quarter Trends
Quarter-over-Quarter Pricing Trends – Base Case
Compared to last quarter’s Survey, front-year pricing decreased by 35.7% for WTI and 16.5% for HH. The
average decrease in pricing for the five years is 21.6% for WTI and 9.1% for HH.
Oil ($/BBL) - WTI
Q4/14
1
Q1/15
Oil ($/BBL) - Brent¹
% Increase/
(Decrease)
Q4/14
Gas ($/MMBtu) - Henry Hub
% Increase/
Q1/15 (Decrease)
Q4/14
Q1/15
% Increase/
(Decrease)
Front-Year
78.53
50.50
-35.7%
84.04
52.50
-37.5%
3.62
3.02
-16.5%
Second-Year
77.21
57.22
-25.9%
82.00
60.17
-26.6%
3.69
3.29
-10.8%
Third-Year
76.24
61.57
-19.2%
79.72
63.67
-20.1%
3.80
3.50
-8.0%
Fourth-Year
76.01
64.60
-15.0%
78.36
66.83
-14.7%
3.91
3.69
-5.6%
Fifth-Year
76.11
66.79
-12.2%
77.62
68.67
-11.5%
4.03
3.85
-4.5%
Sixth-Year and Beyond
0.7%
1.4%
N/A
0.5%
2.0%
N/A
1.5%
1.4%
N/A
Cap
76.91
72.13
-6.2%
78.68
74.75
-5.0%
4.53
4.34
-4.3%
Mean of 3 Participating Banks in Q1/15
Quarter-to-Quarter Base Case Oil (WTI) and Gas (HH) Pricing Trends
$85.00
$/BBL
$75.00
$65.00
$55.00
$45.00
2014
2015
Q2/14
2016
Q3/14
2017
Q4/14
2018
2019
Q1/15
$4.50
$/MMBtu
$4.00
$3.50
$3.00
$2.50
2014
2015
Q2/14
2016
Q3/14
2017
Q4/14
2018
2019
Q1/15
MacquarieCapital ⏐ PAGE 5
Sensitivity Case Results
The Q1/15 Survey also includes a Sensitivity Case, which represents the lenders’ low or conservative price
decks. Of the 39 Participating Banks, 35 banks provided a Sensitivity Case for WTI and 35 banks provided a
sensitivity case for HH, which averages a 18% discount to Base Case lending policies for WTI and 18%
discount to Base Case lending policies for HH over the five-year strip. Three banks provided a Sensitivity
Case for Brent, which averages a 17% discount to the Base Case pricing over the five-year strip.
1st Quarter 2015 Price Survey: Mean of 35 Participating Banks – Sensitivity Case
2015
Oil ($/BBL) - WTI
41.89
Oil ($/BBL) - Brent¹
44.39
Gas ($/MMBtu) - Henry Hub
2.48
2016
47.01
50.23
2.69
2017
50.22
53.60
2.86
2018
52.23
54.64
3.01
2019
53.99
56.35
3.12
2020+ Esc.
1.1%
1.0%
1.1%
Cap
57.39
59.59
3.50
LOE Esc.
0.3%
0.1%
0.3%
9%
9%
9%
Discount Rate
1
Mean of 3 Participating Banks
PAGE 6 ⏐ MacquarieCapital
Current Oil (WTI) Pricing – Sensitivity Case ($/BBL)
$30
2014
$50
$70
2015
$35.00
2016
$41.89
$37.50
2017
$60.00
$47.01
$61.25
$40.00
2018
$50.22
$40.00
2019
High
Mean
$61.25
$52.23
$40.00
Low
$65.98
$53.99
$70.00
Current Oil (Brent) Pricing – Sensitivity Case ($/MMBtu) 1
$30
2014
$50
$70
2015
$40.00 $44.39 $47.18
2016
$47.00 $50.23
2017
$55.68
$51.00 $53.60
2018
$52.00 $54.64
2019
$52.00
High
1
$57.80
Mean
$56.35
$59.93
$62.05
Low
Mean of 3 Participating Banks
Current Gas Pricing – Sensitivity Case ($/MMBtu)
$1.00
2014
$2.00
$3.00
$4.00
$5.00
2015
$2.00
2016
$2.00
2017
$2.48
$3.00
$2.69
$2.00
2018
$2.86
$2.50
2019
High
Mean
Low
$3.19
$2.50
$3.40
$3.01
$3.12
$3.60
$3.75
MacquarieCapital ⏐ PAGE 7
Participating Banks
Macquarie Tristone thanks the following banks for their participation in this quarter’s survey.
Amegy Bank of Texas
CIT
Frost Bank
Santander Bank
BancFirst
Citi
IBERIABANK
Société Générale
Bank of Texas
Citibank
Independent Bank
SunTrust Bank
Bank SNB
Comerica Bank
ING Capital LLC
TD Securities
BB&T
Community National Bank
Mizuho Bank, Ltd.
Texas Capital Bank
BBVA Compass
Crédit Agricole
Natixis
US Bank
BMO Capital Markets
DNB Bank ASA
NBH Bank, N.A.
Wells Fargo
Cadence Bank
First Interstate Bank
Platinum Bank
West Texas National Bank
Canadian Western Bank
First Tennessee Bank
RBC Capital Markets
Whitney Bank
Capital One, N.A.
FirstCapital Bank of Texas, N.A.
Regions Bank
About Macquarie Tristone
Macquarie Tristone has completed more than 300 energy asset
packages valued at over US$28 billion since 2001. As a leading
A&D team, we provide advisory services in energy asset
transactions worldwide to a range of clients in the oil and gas
energy industry.
With a sophisticated suite of asset divestiture processes, coupled
with superior senior-level industry relationships, Macquarie
Tristone brings together an unparalleled combination of disciplines
in engineering, geoscience and economics. Macquarie Tristone’s
expertise extends across all phases of the divestiture process,
including, deal strategy, financial and value analysis, technical
evaluations, buyer identification and qualification, and other dealrelated logistics.
Combined with Macquarie's global resources activities, the result
is a seamless, integrated offering, providing top-tier financial and
execution experience with superior, specialized technical
expertise.
Contact Information
Rob Bilger
Vice Chairman
[email protected]
713-651-4222
Krishna Desai
Associate
[email protected]
713-651-4215
www.macquarietristone.com
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© 2015 Macquarie Capital (USA) Inc.
PAGE 8 ⏐ MacquarieCapital